PROFESSIONAL PERSPECTIVES: Your Money, Your Independence

Summer, Summer, Summertime — Time To Sit Back and… Experience Spend

Recall your age 21 summer?

Mine had DJ Jazzy Jeff and Fresh Prince’s “Sum­mertime” as a soundtrack. Days spent gathering with friends at backyard BBQ’s, a pool or restaurant patios in Portsmouth, then 6 nights a week “working” as a DJ in various clubs on Hampton Beach.

When we reminisce about our past, we recall experiences. Examine fur­ther, you’ll likely realize the small windows of oppor­tunity to enjoy them. For example, two years later I’d be in Florida, working for a minor league baseball team and able to see just one of those friends.

Life is constantly evolving, and moments once passed cannot be relived. Embracing experience spending encourages individuals to seize oppor­tunities to enjoy life while they can. It shifts focus from material wealth to emotional wealth — the happiness, satisfaction, and memories that come from shared experiences and personal adventures.

Why experience spending?

Beyond the concept of having greater value for experiences versus things, studies find people mis­judge what purchases will make them happy, how happy they will feel, and how long that happiness lasts.

Spending money on experiences creates more and longer-lasting happiness than spending on ma­terial goods, which people are more prone to com­parisons and buyer’s remorse. Also, objects tend to deteriorate with time, while experiences can create lasting memories and become part of your identity.

The challenges of getting advice to spend money.

The financial industry, in particular investment management and financial planning, places too little emphasis on helping clients spend money for today’s experiences.

There are various reasons as to why. Advisors paid solely by % of Assets Under Management don’t want assets taken out, as it results in them earning less. For financial planners, it’s easier (and safer) to model goals 15-20 years out, whereas spending now makes analysis harder to balance future outcomes. Furthermore, clients see the impact of recommen­dations immediately and can judge accordingly.

Timing of experiences is critical.

Consider the family vacation to Disney, it is a different shared experience for all going when kids are 6 & 8 versus late teens.

Or the HS senior and family trip you’ve been meaning to do. What’s their availability (and desire) once in college to go on a family trip with mom and dad? That window’s closing.

It’s not limited to just travel.

Saving up for a big purchase is admirable. But in terms of your happiness, is this the best way to allocate finite resources? For many, happiness is more closely aligned to the frequency and variations as opposed to intensity.

Ask yourself if you’d be happier with a few big-ticket items, such as a luxury car, or rather in­dulge frequently in small purchases, such as cooking clubs, memberships, kid’s activities, and spa days?

Financial considerations.

While experience spending prioritizes moments over materialism, it also requires mindful financial planning of your resources. Budgeting involves al­locating funds for activities that align with personal values and goals. It encourages responsible spending by focusing on the long-term benefits of enriching experiences while balancing your financial stability and security.

For instance, imagine parents trying to make up for lost time, now wanting to take the family on a luxury vacation. Sure, they could choose to do that. But would it have been better to have done prudent financial planning all those years of sacrifice by as­sessing current financial health, setting a realistic budget, and exploring cost-effective alternatives that still deliver a memorable experience? Further­more, this approach removes the build-up of unre­alistic expectations and places the focus on making memories together.

I hope you enjoy your “summer, summer, sum­mertime” and may you have “time to sit back and unwind” together.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Glenn Brown lives in MetroWest and is owner of PlanDynamic, LLC, www.PlanDynamic.com. He is a fee-only Certified Financial Planner™ helping motivat­ed people take control of their planning and investing, so they can balance kids, aging parents and financial independence.

Glenn Brown, CFP